Spain's record high "risk premium" shows the indebted country was being shut out of the bond market, Budget Minister Cristobal Montoro said today.
"What the risk premium shows is that Spain does not have the door of markets open to it and the challenge is to build confidence with these markets," he said on Spanish radio.
"This risk premium shows that as a state, that Spain, we have a problem in accessing markets when it is time to refinance out debt," he added.
His comments come just two days before Spain will try to raise between €1-2 billion through the auction on Thursday of medium and long-term bonds.
Minister Montoro also said today it was technically impossible to rescue the debt-laden economy, the fourth largest in the euro zone.
"Spain cannot be rescued in the technical sense of the term. Spain does not need that. Spain needs more Europe, more mechanisms allowing the integration of Europe," he said.
Montoro did not explain why a rescue would be impossible but many analysts fear the size of the economy would stretch the resources of existing European rescue mechanisms.
As bond markets charge exhorbitant rates to lend to Spain, however, investors fear Madrid may be forced to seek external aid to finance a bailout of the bad loan-ridden financial system.
Stricken Spanish lender Bankia alone has asked for a total €23.5 billion to help repair a balance sheet that has a vast exposure to the property market, which crashed in 2008.
Asked whether the "Men in Black" - an apparent reference to faceless financial bureaucrats behind any rescue - would come to take over the country, Montoro said there would be no need.
"To do what we are doing in Spain: to balance the budget, to return to budget stability through constitutional reform, to clean up the banking sector, to improve labour relations, we don't need the 'Men in Black' for that," he said.
Montoro said Prime Minister Mariano Rajoy's government, which took power in December after a landslide election win over the previous Socialist administration, had a mandate to reform.
"We had the vote of Spaniards and that is the task they gave us," he said. "We understand that our future is in Europe, in the euro. And we should clearly bank on the intitutions taking decisions," he added.
